Homebuilder Stocks Jump About 8% After Democrats Win Congress as Mortgage Applications Fall 1.2%

Shares of U.S. homebuilders jumped on Wednesday, Nov. 4, 2026, as investors weighed what a Democratic-controlled Congress could mean for building costs and housing demand, even as fresh data from the Mortgage Bankers Association showed home loan applications slipping for the latest week despite a third straight decline in mortgage rates.

Builders lead the housing trade

As of about 12:09 p.m. ET, D.R. Horton was up 8.3% at about $157.21, Lennar was up 7.9% at $92.86 and PulteGroup had gained 7.9% to about $136.84, according to Yahoo Finance data. Toll Brothers rose 6.4%. The iShares U.S. Home Construction ETF, which tracks a basket of builders and related companies, was 7.5% higher at about $100.57, while the broader SPDR S&P Homebuilders ETF had gained 5.6%.

The gains built on a move that began before the opening bell. Reuters reported that shares of D.R. Horton, Lennar and PulteGroup were up 3% to 5% in premarket trading after Democrats won control of both the Senate and the House of Representatives in Tuesday's midterm elections, while KB Home and NVR were up about 2%. Reuters noted that the PHLX Housing index had fallen about 4% so far this year before Wednesday's session.

What analysts pointed to

According to the Reuters report, UBS said Democratic control of Congress could raise the chances of lower tariffs on building materials, which the brokerage estimates add about $7,500 to the cost of a new home. UBS also said an expanded deduction for state and local taxes could lift disposable income and support housing demand, particularly in high-tax states, and that two bills, the More Homes on the Market Act and the First Home Affordability Act, could help housing turnover and affordability for first-time buyers.

The new Congress does not take office until January, and President Donald Trump retains his veto. "Legislative options are likely to be limited in a divided government, where a Democratic House and Senate will either need to work with the Republican White House or find enough Republican legislative support to override a likely veto," Realtor.com senior economist Jake Krimmel said in comments published by Realtor.com.

Housing stocks also moved with a broad rally on Wall Street. The S&P 500 was up about 1.8% at midday, and the 10-year Treasury yield, a benchmark that lenders use when pricing 30-year mortgages, eased to about 4.90% from 4.95% on Tuesday, according to Yahoo Finance data.

Mortgage demand slips again

The stock rally came on the same morning that the MBA's Weekly Mortgage Applications Survey showed total application volume fell 1.2% on a seasonally adjusted basis in the week ended Oct. 30, partly reversing a 3.4% rise the week before. The seasonally adjusted Purchase Index fell 2% and was 19% lower than a year earlier on an unadjusted basis. The Refinance Index rose 0.1% from the prior week but was 60% below the same week of 2025.

The average contract rate on a 30-year fixed-rate mortgage with a conforming balance of $832,750 or less fell to 7.3% from 7.37%, with points easing to 0.75 from 0.76. The jumbo rate fell to 7.2% from 7.28%, the FHA rate dropped to 7.02% from 7.12%, and the rate on a 5/1 adjustable-rate mortgage declined to 6.29% from 6.41%. The 15-year fixed rate rose to 6.76% from 6.7%.

"Mortgage rates drifted down to their lowest level since September 2026 last week in the wake of the Federal Reserve's decision to hold on additional rate hikes at its October meeting," said Mike Fratantoni, the MBA's senior vice president and chief economist. "While the 30-year rate declined to 7.3%, activity is still quite slow." He added that more borrowers are choosing adjustable-rate loans to lower their initial payments, with the ARM share at its highest level since September 2025.

The ARM share of applications rose to 11.4% from 11.3%, and the refinance share increased to 39.8% from 38.9%. Haver Analytics reported that the average loan size fell 0.3% to $377,400, while the average purchase loan edged up to $452,600.

Realtor.com noted that the 30-year contract rate averaged 6.17% a year ago, and that Freddie Mac's separate weekly survey put the 30-year rate at 7.24% last week, down from 7.32%. CNBC reported that rates moved slightly higher to start this week, according to Mortgage News Daily, after a stronger-than-expected report on job openings.

Signals from the services survey

Separate data released Wednesday underscored the soft spots in property-related activity. In the Institute for Supply Management's October Services PMI report, construction was one of only two industries to report contraction, and for the third month in a row it was the only industry reporting a decrease in new orders. Real estate, rental and leasing was one of two industries reporting lower business activity. One respondent quoted by ISM said, "Excess speculative home inventory must sell before we can start new ones."

Markets are also watching the Federal Reserve, which left its benchmark rate at 3.75% to 4.00% at its Oct. 28 meeting. Realtor.com said CME Group's FedWatch tool put the probability of another rate increase in December at just under 80%.

Sources: Reuters (via Boursorama), Nov. 4, 2026; Mortgage Bankers Association, Nov. 4, 2026; Realtor.com, Nov. 4, 2026; CNBC, Nov. 4, 2026; Haver Analytics, Nov. 4, 2026; Institute for Supply Management, Nov. 4, 2026; Yahoo Finance market data as of about 12:09 p.m. ET.